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Net Profit Up 20% For Hanover Finance

11 March 2007
Media Release

Net Profit Up 20% For Hanover Finance

Disciplined lending and matching funds inflow to requirements delivers record half year profit

Disciplined lending and matching funds inflow to lending requirements contributed to Hanover Finance recording a 20% increase in profit after tax to $20.9 million for the half year to 31 December 2006, compared to the same period in 2005. This result was achieved despite the sector facing significant challenges during 2006. *

Combined pre-tax profit for the four Finance Companies in the Hanover Group - Hanover Finance, United Finance, Nationwide Finance and FAI Finance – was $36.7m, up 28% on the prior year. ** This included particularly strong performances by both Hanover Finance and United Finance, respectively up 20% to $20.9m and 145% to $4.1m.

Chairman Greg Muir says the overall result for Hanover’s finance companies demonstrates the strength and quality of the organisation. “To achieve significantly improved profit performance at a time when investor confidence was impacted by the collapses of 2006 and when others appear to be struggling is very pleasing.”

“We actively managed funds inflow across the four Finance Companies to match the needs of our disciplined lending programmes. As the quality end of the lending market tightened during 2006, we recorded a slight reduction in total assets across our Finance Companies of 5%, when compared to the same period in 2005. Total liquidity across the Companies has increased to $191.8m, up 6.2% on 2005.”

Mr Muir says reinvestment rates by debenture holders are currently running at around 80% and new investment flow was also good. The Group has also put in place $200m of banking lines to diversify its funding base, further strengthening liquidity.

“The standing of the Hanover Finance Companies enabled them to prosper even when times became uncertain for the market in general. We focused on our strengths, particularly in property investment, and as a result our finance companies are well placed to continue their growth.”

Results summary: Hanover’s Finance Companies, six months to 31 December

2006 2005 Change
Pre tax profit $36.7m $28.7m +28.0%
After tax profit $26.9m $20.9m +28.9%


ENDS

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